Why all law firms should now be offshoring

Forty-per cent of top tiers and 30% of mid tiers are already using offshoring to drive growth, and according to Diversify CEO Angela Vidler, the New Zealand market is looking very similar.

On the one hand, large firms have the cash to throw behind it and on the other hand, mid tiers often try and fail. But the benefits to firms of all sizes are significant, Vidler said.

“Once you get through the initial hurdles, there absolutely is a 70% cost saving,” she told Australasian Lawyer.

The hurdles are often a significantly higher labour cost in the first 12 months, among others. But Vidler said Diversify is starting to see firms that failed the first time around, take another crack.

“Small to medium sized firms try outsourcing first because they don’t have the resources to offshore, or they think they don’t have the resources to offshore, and therefore fail because they are handing over all of their control, information and data,” she said.

“[But] there are huge growth opportunities for businesses.

“There a number of businesses in Australia and New Zealand that simply can’t afford to have on certain resources because they are just too expensive here in Australia and they can’t sustain it.”
But implementing offshoring or outsourcing in the first instance can mean medium sized firms are at a much greater risk than top tier firms, which can be daunting.

“The challenges come for small and medium sized firms around the level of resources you have to put into the team up and running and getting it off the ground, and that’s where using a provider, as opposed to doing it on your own, can really help,” she said.

With a background in professional services, Vidler knows exactly where offshoring works, and where it doesn’t. She said firms outsourcing their non-legal functions are having the most success.

“It’s about taking that low value work out of Australia, putting it in the Philippines and allowing your staff here to do high value work where you can make a greater return,” she said.

“I think the benefits are the same, no matter what sized firm you are.”

So what about the social impact of removing jobs and career paths for young Australians ? Surely there is some social obligation to "use Australian" and not just "buy Australian. Some people thankfully refuse to use accounting firms that outsource like this and I would like to think clients will start asking those questions of legal firms - and hopefully even the big end of town.